Bulgaria, Croatia, Poland, and Romania: What happened to households’ welfare throughout the successive crises in 2020-2022? 1. Introduction On March 11, 2020, the world came to a halt when the World Health Organization declared COVID-19 a global pandemic. Countries around the globe raced to put in place curfew and movement restrictions, and support packages for people and businesses. Two and a half years later, the pandemic persists with its clear imprint on economic growth, the labor market, and the delivery of basic services. The unfortunate reality is that the poorest and most vulnerable have borne the greatest burden of the crisis, as has often been seen in the past. But this is not the only crisis. Earlier this year, on February 24, 2022, the Russian invasion of Ukraine has fed through to households in Europe through multiple transmission channels. The ongoing war in Ukraine and the prolonged economic impacts of COVID-19 have led to soaring food and energy prices, which is weighing heavily on households, especially the vulnerable. This analysis aims to capture how the welfare of households in four European countries have changed throughout these crises. Our findings are based on a series of rapid assessment surveys conducted since the beginning of the COVID-19 pandemic by the World Bank (WB). This note focus on four EU countries Bulgaria, Croatia, Poland, and Romania1 and captures the multiple dimensions through which households have been affected by the crises. This note: (i) analyzes the overall impact of the COVID-19 pandemic on labor market outcomes across all four countries; (ii) assesses the evolvement of households’ income and economic wellbeing throughout the crises; (iii) evaluates the implications of rising prices on households’ consumption patterns and poverty; and (iv) reviews governments’ policy responses to support affected households and people’s perceptions of such policies. Key findings include: • Significant labor market impacts of the crisis were noted early in the crisis for all groups of workers, but recovery of aggregate employment was seen by early 2021. The labor market impacts were however heterogeneous, with deeper and more prolonged impacts visible among more vulnerable groups. • The recovery of the labor market translated into a rebound of household income, but an unexpected surge in inflation starting from the end of 2021, fueled by the war in Ukraine in the beginning of 2022 reduced households’ purchasing power making it harder to make ends meet. Financial prospect remains uncertain. • In response to the rising costs of living and uncertainty of their financial prospects, households have adjusted their consumption patterns and relied more on unsustainable coping mechanisms. • While the war and cost of living are at the forefront of households’ daily concerns, the recovery still depends on the course of the pandemic, especially given the low vaccination rate in Romania and Bulgaria in particular. • As the war in Ukraine continues, Europeans’ concern about the impacts of the war become almost universal. • Proactive policy responses will continue to be needed to stem the impacts of rising prices on vulnerable households, to reduce the risk of hysteresis and labor market scarring among vulnerable groups and to ensure that learning losses incurred during the pandemic do not ossify into longer-term human capital loss. 1 WB program countries with Country Partnership Frameworks in place. 1 2. Data The note is based on the WB Rapid Assessment Surveys conducted by the WB EU Poverty Team with complementary data from Eurostat. The phone surveys were fielded in Bulgaria, Croatia, Poland, and Romania from June 2020 to June 2022 to capture the impacts of the crisis along dimensions of employment, income, economic well-being, and perception to government’s response policies as the crisis unfolds. All surveys include about 1,500 households and are representative at the national, rural, and urban areas. While the surveys all cover core topics, they were adapted to country-specific issues. In addition, surveys were carried out in different time periods across countries. Therefore, for the purpose of this umbrella policy note, we attempted to harmonize the datasets as much as possible. However, it is impossible to harmonize all indicators. Hence, some graphs in this note will miss a country or a survey period due to the unavailability or incomparability of indicators. Annex 1 provides more details of the surveys. 3. Impacts of the crisis on households’ welfare The unprecedented global pandemic led to a contraction of GDP in 2020 in all four EU countries covered in this note, from -2.5 percent in Poland to -8.1 percent in Croatia despite the rapid and sizeable policy responses.2 The years 2021 and early 2022 brought positive news with notable economic rebound, especially Croatia with GDP growth of 10.2-percent in 2021. However, uncertainties triggered by the war in Ukraine have stalled the recovery process, through adverse spillovers and contributing to already rising prices of essential goods, food and energy in particular. Moreover, the war has brought additional turmoil: the geopolitical instability, additional disruption of supply chains and energy provision, impeded trade and financial flows, and the influx of forcibly displaced persons (FDP), especially to Poland, Bulgaria and Romania. The macroeconomic conditions are also reflected at a household level through income, consumption patterns, and access to basic services. However, the effects are heterogeneous across different population groups. As in past crises, the poorest and most vulnerable have been disproportionated affected. Much of the impact of the COVID-19 pandemic on households’ welfare was transmitted through changes to the labor market. In all four countries, the disruption and recovery of the labor markets closely followed the implementation and later removal of containment and closure policies that restricted movement and work. During the first wave of the COVID-19 pandemic, during which the most stringent containment and closure policies were implemented, unemployment increased significantly, with a record-high level in Croatia (Figure 1). As countries slowly eased and eventually removed pandemic related restriction policies, labor market recovery started to be seen from Q1 of 2021. By Q1 of 2022 – less than two years since the outbreak of the pandemic – all countries but Romania had seen overall rebound to their pre-crisis level of employment. The rapid reduction of unemployment rates contrasts with the long delay in the return to pre-crisis labor market conditions experienced during past crises. During the 2008 financial crisis, it took nearly a decade for the unemployment rate to return to its pre-crisis level. The level of government support provided extended reflects a key difference between the two crises that limited the impact on households and businesses. Support was provided in the form of, inter alia, credit guarantees, liquidity facilities, loan moratoria, enhanced unemployment insurance, wage subsidies, expanded social assistance and tax relief. However, the focus of these relief packages in some countries, such as Croatia, was primarily on business and workers, which left unemployed and inactive populations with little support. 2 GDP contraction in 2020 was -3.7 percent and – 4.4 percent for Romania and Bulgaria, respectively. 2 Figure 1 Unemployment rates across all four countries 10. % population in the labor force 8. 6.7 6.3 7.0 6.5 6.3 6. 6.0 5.7 5.1 4.9 4.5 5.4 4. 2.9 4.5 2.8 3.1 2. 2019-Q4 2020-Q1 2020-Q2 2020-Q3 2020-Q4 2021-Q1 2021-Q2 2021-Q3 2021-Q4 2022-Q1 Bulgaria Croatia Poland Romania European Union - 27 countries (from 2020) Source: Eurostat 2022. While employment across all economic activities was struck by the crisis, the magnitude of the impacts varied significantly across population groups. World Bank (2020, 2021 and 2022) noted that labor market restrictions affected more vulnerable groups, resulting in a higher incidence of work stoppages. This was reflected in a higher incidence of work stoppages among lower-wage workers, those with non-standard and less-secure contract types, those in low-skilled occupations and younger segments of the labor force. In Romania, for example, work continuation for low-income workers3 dropped to 76 percent of their pre-crisis level at the height of the restriction policies in April 2020. In the same month, this figure was 87 percent for workers in the top 20 (Figure 2). Figure 2 Work continuation across income categories in Romania 100 98 95 96 94 Proportion of February 2020 workers 90 Vaccination roll-out 85 Pre- Fourth wave 80covid Ease of Second wave Third wave (Omicron) First wave restrictions 75 Bottom 40 Top 20 Middle 40 Source: World Bank Assessment Surveys in Romania, 2020-2022. A more dramatic difference in the recuperation of labor market is observed by skills, defined in terms of occupation, but the trend is mixed across countries. In Romania, only high-skill workers have experienced a return in the total number of jobs of to their 2019 level. On the other hand, low-skill workers still bore the 33 Defined as those at the bottom 40 percent of the income distribution. 3 brunt of the employment contraction as of Q1 of 2022 (Figure 3 – panel D). But in Poland, white collar workers, especially those with high skills, have seen an increase in total employment while blue collar workers, in particular with low skills, are still lingering with the number of jobs below those seen during the pre-pandemic labor market (Error! Reference source not found., panel C). In Croatia, low-skilled workers were the most affected. A plausible explanation could be that they tend to concentrate in sectors (such as hotel, transport, food service activities, wholesale and trade sectors) that were most severely impacted by labor market disruptions. On the contrary, the rebound of employment for high-skill white workers can be explained by them being less affected but also being more exposed to an accelerated digital transition that allowed for working from home and avoiding disruptions caused by restriction policies. The story is more complex in Croatia where low-skill blue collars were hit the most and the longest, but low-skill white collars have recovered much faster, starting from Q4 of 2020. Figure 3: Quarterly employment by skills Panel A: Bulgaria Panel B: Croatia 110 120 Index 2019 = 100 Index 2019 = 100 105 110 100 100 95 90 90 80 85 80 70 Low-skill blue collars High skill blue collars Low-skill blue collars High skill blue collars Low-skill white collars High-skill white collars Low-skill white collars High-skill white collars Panel C: Poland Panel D: Romania 115 110 Index 2019 = 100 Index 2019 = 100 105 105 100 95 95 85 90 75 85 65 Low-skill blue collars High skill blue collars Low-skill blue collars High skill blue collars Low-skill white collars High-skill white collars Low-skill white collars High-skill white collars Source: Eurostat, 15-64 years old, unadjusted data. As expected, trade, transport, and tourism sectors have been the most affected by the pandemic but also recovered quickly to their pre-crisis level. At the beginning of the pandemic in Romania, work continuation was 79 percent in trade, tourism, and transportation sectors, compared to 93 percent in the government sector. Similarly, in Bulgaria, only 65 percent of pre-crisis workers in the trade, tourism and transportation sectors continued working compared to 87 percent in the public sector during the early onset of the pandemic. In Poland, 65 percent of workers in the tourism and accommodation sector faced reduced working hours, wage reduction or job loss, which represented nearly twice the effects of other sectors (Figure 4). As governments started to ease restriction measures, workers in trade, transport, and tourisms sectors quickly recovered to their pre-crisis level, as soon as July 2020 in Romania. 4 Figure 4 Employment Impact of Covid-19 across sectors in Poland Hotels and restaurants 65% Wholesale and retail trade; repair of motor vehicles… 38% Transport, storage and communication 37% Other community, social and personal service activities 36% Construction 35% Manufacturing 33% Real estate, renting and business activity 32% Mining and quarrying 30% Electricity, gas and water supply 30% Financial intermediation 30% Agriculture, hunting, forestry, fishing 26% Education 23% Health and social work 22% Public administration and defence; compulsory social services 19% 0% 10% 20% 30% 40% 50% 60% 70% Share of workers impacted by COVID-19 Note: Covid impact on workers is measured as job loss, wage or salary stoppage, wage or salary reduction or reduced working hours. Source: World Bank Rapid Assessment Survey in Poland November 2021. While the labor market has rebounded from the pandemic, uncertainty about jobs remained, especially among younger cohorts and people in urban cities. As of Spring 2022, worries about losing current jobs or not finding new jobs were still elevated. In Romania, for example, 54 percent of working-aged people expressed this concern. Urban workers, youth, and people in prime-working age were more likely to be worried about their job prospect (Figure 5). A similar trend is observed in Croatia. Figure 5: Worries about finding new jobs or about losing current jobs in Romania 80 70 70 61 % working-age 54 57 60 46 40 28 17 20 0 Rural Urban 15-24 25-49 50-64 65-79 80+ National Location Age Source: World Bank Rapid Assessment Survey in Romania, April 2022. The Covid-19 crisis is also not gender-blind, but its impacts are mixed across Bulgaria, Croatia, Poland, and Romania. Before the crisis, gender gaps already existed in the labor market (e.g. labor force participation, unemployment, sector of activity, part- or full-time contract, temporary or permanent contract, etc). According to the EU Labor Force Survey (LFS), accessed from Eurostat in 2022, pre-pandemic female labor force participation in all four countries was already lower than the EU average, with the lowest rate being in Romania (55 percent in late 2019), and the highest being in Bulgaria (69 percent). Also prior to the pandemic, women were more likely to hold temporary contracts than men (Figure 6 – Panel B). The impacts of the pandemic on gender gaps in the labor market is mixed. In Poland, since Q4 of 2020, women started to work more and hold more full-time jobs than men (Figure 6 – Panel A), yet they continued to have more temporary contracts. Throughout the pandemic, the gap between full-time male and female workers increased in Romania, which is even more alarming as Romania already has the highest gender employment gap (19.8 5 percentage points) among this EU country group. Meanwhile, these gender gaps appear to have marginal changes in Bulgaria and Croatia. Figure 6 – Panel A: Full-time workers by gender 110 Index 2019 = 100 90 2019-Q4 2020-Q1 2020-Q2 2020-Q3 2020-Q4 2021-Q1 2021-Q2 2021-Q3 2021-Q4 2022-Q1 European Union - 27 countries (from 2020) Males European Union - 27 countries (from 2020) Females Bulgaria Males Bulgaria Females Croatia Males Croatia Females Poland Males Poland Females Romania Males Romania Females Figure 6 – Panel B : Share of employed persons with temporary contracts 25. Percentage of total employment 20. 15. 10. 5. 0. 2019-Q12019-Q22019-Q32019-Q42020-Q12020-Q22020-Q32020-Q42021-Q12021-Q22021-Q32021-Q42022-Q1 European Union - 27 countries (from 2020) Males European Union - 27 countries (from 2020) Females Bulgaria Males Bulgaria Females Croatia Males Croatia Females Poland Males Poland Females Romania Males Romania Females Source : Authors’ caluclation based on EU Labor Force Survey, accessed through Eurostat in 2022. The recovery of the labor market translated into a rebound of household income, but an unexpected surge in inflation starting from the end of 2021, and fueled by the war in Ukraine, in the beginning of 2022, reduced households’ purchasing power making it harder to make ends meet. Financial prospects remain uncertain. As the pandemic progressed, household income recovered as a reflection of the recovery of the labor market and the responsive government policies. By the fourth wave of the pandemic in Fall 2021, fewer households reported decreased income. This is partially due to adaptation on the part of firms through increased e-commerce, of workers, through increased use of remote work, and of governments, through the extension and expansion of government support programs, although a majority of households reported that the support packages were not sufficient (Box 1). In Q4 of 2021 almost two years from the start of the pandemic - only 15 percent of Croatian households reported a decline in income from their pre-crisis level, down from 22 percent in the previous year (Figure 7). The same trend is observed in Bulgaria (13 percent and 20 percent between Q4 of 2021 and Q4 of 2020 and Romania (18 percent and 23 percent during the same period). 6 Figure 7: Monthly labor income compared to pre-crisis level 25 80 Percentage of households Covid-19 Stringency index 70 20 60 15 50 40 10 30 20 5 10 0 0 Second Third Peak Fourth Second Third Peak Fourth Second Third Peak Fourth wave wave vacine wave wave wave vaccine wave wave wave vaccine wave (Winter (Spring roll-out (Fall (Winter (Spring roll-out (Fall (Winter (Spring voll-out (Fall 2020) 2021) (Summer 2021) 2020) 2021) (Summer 2021) 2020) 2021) (Summer 2021) 2021) 2021) 2021) Bulgaria Croatia Romania Decreased more than 20% Decreased less than 20% Covid-19 Stringency index Source: World Bank Rapid Assessment Surveys 2020-2022 in Bulgaria, Croatia, and Romania; and The Oxford Coronavirus Government Response Tracker (OxCGRT) Box 1: Governments’ COVID-19 support measures and households’ perception. Similar to other EU countries, the governments in the four countries covered in this note sought to incentivize employers to retain workers, mainly through job retention schemes . As reduced business revenue led to falling profits, governments stepped in to offer wage support to businesses to reduce labor costs. The design of programs varied across countries, including short-term work schemes and wage subsidy schemes. In Croatia, employment- related programs included grants to support reduced working hours, and job preservation grants for certain affected sectors. In Bulgaria, the government provided 60/40 wage subsidies (e.g. the government financed 60 percent of the wage costs for affected firms) in addition to direct grants to firms in affected sectors to address their liquidity needs and help continue their operations. The Romanian government covered partial salaries for certain types of workers, allowance for technical unemployment, one-off financial support for employers with teleworkers, as well as free paid days to parents to supervise their children during the temporary closure of educational establishments. In Poland, the government provided wage subsidies for employees of affected business and self-employed persons, increased unemployment benefits, and provided an allowance for parents of young children related to school closures. As the pandemic endured, governments adjusted the coverage, generosity and scope of their assistance packages. As it became increasingly clear that the crisis would be prolonged and that workers and households would need additional support, governments revised their assistance packages. Amendments included increasing the duration and generosity of support to workers, including previously excluded workers such as self-employed workers in alternate income support schemes, expanding and waiving qualification requirements for unemployment benefit schemes, extending and expanding support for parents and caregivers, increasing cash and in-kind support to vulnerable populations such as the elderly, homeless and those with disabilities and expanding moratoria provisions. But fiscal support has led to a sharp increase in public debt, and nearly doubling of the financing needs in 2020. According to the IMF estimates, between 2020 and 2019, public debt stock increased by 5 percent, 12 percent, 12 percent, and 16 percent of GDP in Bulgaria, Romania, Poland, and Croatia, respectively. However, few governments adjusted guaranteed minimum benefit schemes, leading to gaps in coverage among some categories of vulnerable population and households’ dissatisfaction. In the absence of coverage or inadequate coverage by wage support schemes, unemployment benefit schemes and other such schemes tied to full-time formal employment, it is likely that informal and non-standard workers resorted to the Guaranteed Minimum Benefit (GMB) schemes to supplement shortfalls to income. However, most GMB schemes were not adjusted in response to the COVID-19 shock and some suffered from pre-existing deficiencies, rendering the GMB an inadequate coping 7 mechanism. There were also reports in Romania of households, particularly the Roma, relying on continued access to the child and family allowance benefits as their sole source of income as remittances and informal work had dried up. As the schemes were not intended to be income replacement schemes, they are likely inadequate in supporting households who have experienced substantial shocks to income. At least half of the respondents in Bulgaria, Poland, and Romania stated that governments’ support packages were insufficient. One in every three Croatians reported so. Perception of government’s supports to households as Perception of government’s supports to business as insufficient insufficient 70 70 60 60 50 50 % respondents % respondents 40 40 30 30 20 20 10 10 - - Bulgaria Croatia Poland Romania Bulgaria Croatia Poland Romania Winter 2020 Spring 2021 Summer 2021 Fall 2021 Winter 2020 Spring 2021 Summer 2021 Fall 2021 Source: Rapid surveys 2020-2021 with compatible indicators. However, as 2021 came to a close, households were confronted with the rising cost of living amidst existing concerns around food security which served to further undermine the recovery process. The war in Ukraine in 2022 put additional challenges to soaring prices, especially energy. The prolonged pandemic, bad weather in 2021 affecting crops, coupled with the ongoing war in Ukraine have produced a cocktail of soaring food and energy prices harming consumers and further undermining the recovery process. As of July 2022, the price of food and non-alcoholic beverages has increased by 26 percent in Bulgaria, 22 percent in Romania, 19 percent in Croatia and 18 percent in Poland compared to the 2020 price level (Figure 8 – Panel A). Alarmingly, the price of electricity, gas, solid fuels and heat energy has increased even more, by 50 percent in Romania, 44 percent in Poland, 30 percent in Bulgaria and 19 percent in Croatia during the same period (Figure 8 – Panel B). Figure 8 – Panel A: Harmonized index of consumer prices (food and non-alcoholic beverages) 150. 146 Index 2015 = 100 140. 138 130. 117 126 120. 110. 116 113 100. 109 106 2020-09 2022-05 2020-01 2020-02 2020-03 2020-04 2020-05 2020-06 2020-07 2020-08 2020-10 2020-11 2020-12 2021-01 2021-02 2021-03 2021-04 2021-05 2021-06 2021-07 2021-08 2021-09 2021-10 2021-11 2021-12 2022-01 2022-02 2022-03 2022-04 2022-06 2022-07 Bulgaria Croatia Poland Romania EU - 27 (from 2020) Figure 8 – Panel B: Harmonized index of consumer prices (electricity, gas, solid fuels, and heat energy) 8 180. 176 170. 160. Index 2015 = 100 154 150. 148 144 140. 130. 117 120. 111 108 105 110. 100. 103 90. 96 2020-01 2020-02 2020-03 2020-04 2020-05 2020-06 2020-07 2020-08 2020-09 2020-10 2020-11 2020-12 2021-01 2021-02 2021-03 2021-04 2021-05 2021-06 2021-07 2021-08 2021-09 2021-10 2021-11 2021-12 2022-01 2022-02 2022-03 2022-04 2022-05 2022-06 2022-07 Bulgaria Croatia Poland Romania EU- 27 (from 2020) Source: Eurostat 2022 Note: The Harmonized Index of Consumer Prices (HICP) is an economic indicator comparable across countries that measures inflation of the prices of consumer goods and services acquired by households. While rising prices pinch everyone’s budget, poor households have little or no financial cushions to weather the shocks especially when they tend to spend a larger budget share on food and energy than their richer counterparts. Even before the crisis, households at the bottom decile of the income distribution already spent more than half of their budget on essentials of food, housing, and energy. This figure can be as high as 65 percent as in the case of Bulgaria and Romania (Figure 9). For many of these households, total expenditure already takes or exceeds their income resulting no savings during time of crisis. As the winter heating season 2022/2023 is approaching, households using natural gas or electricity for heating in their home, or gas-fired district heating are particularly vulnerable to energy prices (Figure 10). Box 2: Governments’ responses to rising prices and households’ perception In early 2022, the governments of Bulgaria, Croatia, Poland, and Romania have swiftly put in place support schemes to shield consumers and businesses from rising prices, in particular energy prices. In Croatia, the government introduced a permanent reduction in the value added tax (VAT) rate for gas and heat, in addition to a housing allowance which includes the cost of electricity, gas, and heating. The Bulgarian authorities froze power and heating prices from December to March 2022 to reduce vulnerability in the winter months as well as provided heating assistance targeted poor households. In Poland, the government implemented an “anti-inflation shieldâ€? which temporarily reduced VAT on food, gas, fertilizers, petrol, diesel, and heating. Moreover, the government strengthened Special Needs Allowance for housing-related costs and allowance to help households struggling with energy bills. The Romanian government imposed a temporary cap on electricity and natural gas prices and introduced a series of grants and vouchers (e.g. Heating Energy Allowance, Natural Gas Allowance, Solid Fuel or Oil Allowance) to help vulnerable Romanians and businesses. However, facing rising costs of living, a majority of people believed these policy responses were not sufficient. In Romania and Croatia where we conducted surveys after the governments’ announcement of support measures , more than 60 percent of respondents reported insufficient support. In Croatia, people in lower income bracket and rural areas were more likely to express dissatisfaction. However, in Romania, middle-income and urban residents were more affected. Share of Romanians stating that the government’s Share of Croatians stating that government’s energy energy responses were insufficient responses were insufficient 9 70 70 60 60 % respondents 50 % respondents 50 40 30 40 20 30 10 20 - 10 - National Bottom Mid 40 Top 20 Rural Urban 40 Source: Romania rapid survey, June 2022 Source: Croatia rapid survey, April 2022 Soaring prices are likely to contribute to rising poverty. Our simulations4 show potential at-risk-of-poverty increase from higher food and energy prices would range from 1.3 percentage point in Romania to 3.7 percentage points in Poland (Figure 11). This translates to an increase in the number of the poor by 172,000 in Bulgaria, 80,000 in Croatia, 1,409,000 in Poland and 252,000 in Romania. It is important to note that some of the policy measures employed to protect households from rising prices were integrated into the analysis but not all policy measures were considered. For example, extensive use of price regulation of fossil fuels and reduction in VAT (food, fuel) to dampen inflationary rise should be captured in measured price increases. However, targeted transfers or targeted price regulation such as the inflation allowance in Poland, targeted price regulations in Romania, and energy vouchers for poorer households in Croatia are not incorporated in the simulation. Figure 9. Household expenditure on food and energy as share of total budget 70 60 Budget share 50 40 30 20 10 0 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 Bulgaria Croatia Poland Romania consumption decile Food & beverage (%) All energy (%) Source: Household Budget Surveys. Figure 10. Household expenditure on different energy sources as share of total budget 4 Simulations are based on weighted aggregate of expected inflation comprised of food, energy and other, where the weights are shares of food, energy, other in total consumption among households at the bottom 20 percent of the income distribution. Our baseline uses poverty rate in 2019 using 2011 anchored at-risk-of-poverty line, inflation rate in 2022 (Oxford econ model) effectively compared to 2011 (latest poverty data available). We assume full price increase pass- though and does not take into account behavior shifts in consumption patterns. 10 25 20 % budget share 15 10 5 0 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 Bulgaria Croatia Poland Romania consumption decile Electricity Gas Liquid fuel Solid fuel Source: Household Budget Surveys. Figure 11. Impacts of rising prices on poverty Source: Authors’ calculation based on Household Budget Surveys and SILC. In 2022, rising food and energy prices and economic uncertainty became the chief concern among households. The latest snapshot in April 2022 shows these worries were constantly in the mind of more than 95 percent of Bulgarians (Figure 12). The same figures are observed in Croatia and Romania. Importantly, six in ten residents in our four countries reported being very concerned about inflation. This high level of concern about cost of living is seen across all income levels and geographical locations. Even though all age groups were concerned about prices, the level was higher in older generation aged 65 and above than youth aged 15- 24 (99 percent vs. 92 percent, respectively). As the rising cost of living outpaces economic and labor recovery, more households – especially the poorest - face difficulties in making ends meet. In all four countries, summer 2022 is marked with an increasing proportion of households reporting that it is harder for them to make ends meet than their pre-crisis level (Figure 13). In Romania, nearly twice as many households reported so between spring 2021 and summer 2022 at 37 percent and 63 percent, respectively. A comparable increasing trend can be found in Croatia (from 33 percent to 58 percent), Bulgaria (from 33 percent to 46 percent) and Poland (from 48 percent in Spring 2021 to 55 percent in Fall 2021). The unfortunate reality is that the poorest households were struggling even more: in spring 2022, seven in ten Croatian households at the bottom 40 percent of the income distribution declared higher difficulties in making ends meet. This figure is the same for Romanian households in summer 2022. 11 Figure 12. Chief areas of concern among Bulgarian Figure 13. Harder to make ends meet compared to households, April 2022 pre-crisis level Energy prices 98% 37 Romania 47 54 63 Food prices 97% 48 Poland 55 Economic situation in Bulgaria 95% Political situation in Bulgaria 90% 33 Croatia 38 58 Health 86% 32 Bulgaria 46 Covid restrictions 60% Job situation 50% 0 20 40 60 80 0% 20% 40% 60% 80% 100% Spring 2021 Fall 2021 Spring 2022 Summer 2022 Source: Bulgaria rapid survey, April 2022 Source: Rapid surveys across countries Although at the aggregate level economic forecasts suggest positive economic growth and slower inflation in 20235, households still express a bleak prospect for their financial situation and expect persistent struggle in the coming year. In Romania, spring and summer 2022 mark an uptick in the share of households expecting worsening financial situation in the next 12 months. In mid-2022, 54 percent of Romanian households reported so, a significant jump from 40 percent in early 2021 (Figure 14). In fact, by mid-2022, about half of households across Bulgaria, Croatia, and Romania expressed a pessimistic view of their financial prospects (Figure 15). Moreover, a strong economic projection does not reflect in households’ expected spending: at least half of the residents in Bulgaria, Croatia, and Romania expected less spending on durable goods and restaurants in the coming year (Figure 16 and 17). Alarmingly, the level of pessimism is much higher among households in the bottom 40 percent of the income distribution signaling persistent effects of the crisis on poor households. Figure 14: Romanian households’ financial prospect, Figure 15: Share of households reporting over time worsening financial situation in the next 12 months, by country 60 70 62 59 Shuare of households 50 55 Share of households 60 54 40 27 27 48 49 25 50 30 25 24 21 22 40 20 10 20 20 27 27 30 19 16 16 0 20 10 0 Bulgaria Croatia Romania Much worse Worse National Bottom 40 percent Source: Romania rapid surveys 2020-2022 Source: Bulgaria and Croatia rapid surveys in April 2022, Romania rapid survey in June 2022. 5 World Bank Macro-Poverty Outlook 2022. 12 Figure 16: Share of households expecting less spending Figure 17: Share of households expecting less on durable goods in the next 12 months, by country spending on restaurants in the next 12 months, by country 80 73 73 75 80 75 69 70 70 70 63 60 60 60 55 50 48 % households % households 50 42 50 40 40 30 30 20 20 10 10 - 0 Bulgaria Croatia Romania Bulgaria Croatia Romania National Bottom 40 National Bottom 40 Source: Bulgaria and Croatia rapid surveys in April Source: Bulgaria and Croatia rapid surveys in April 2022, Romania rapid survey in June 2022. 2022, Romania rapid survey in June 2022. In response to rising costs of living and uncertainty of their financial prospects, households adjust their consumption patterns and relied more on unsustainable coping mechanisms. With the prolonged pandemic and war in Ukraine, households’ savings have dwindled limiting the ability of vulnerable households to cope with the impact of the crises. When faced with a shock, households usually resort to savings or borrowings to smooth consumption. Given that the COVID-19 pandemic and rising costs of living are a symmetric and synchronous shock, all households are impacted at the same time and many of the poorer households have relatively lower levels of financial access. In Romania for example, few households can rely on their savings, and report mostly cutting their expenses on both non-food and food items. In fact, over the course of the two crises the share of households reporting savings that would allow them to cope with future income shocks has declined, and by June 2022 only 13 percent of the poorest households in Romania had savings to cope with any future income reduction, compared to 19 percent at the beginning of the pandemic (Figure 19). Stark differences also exist across the income distribution for reductions in expenses: 95 percent of the bottom 40 percent households cut their non-food expenses compared to 72 percent for households from the top 20 percent (Figure 18). This is a worrisome sign because non-food expenses for vulnerable households include mostly essentials such as energy, healthcare costs, and school supplies. Limited ability to cope with the impact of the crisis could have potential implications on human capital accumulation, especially among vulnerable households (Box 3). Figure 18: Romanian households’ coping strategy with Figure 19: Households reporting having savings income decline in the next seven weeks in Romania, over time 13 100 35 33 90 30 80 70 25 60 19 50 20 17 40 13 15 30 20 10 10 - 5 Reduced Reduced Relied on Received Got a loan Took out a Receive food costs non-food savings help from from the financial assistance 0 expenses family and bank loan from from the friends family or state friends Bottom 40 Middle 40 Top 20 Average Bottom 40 percent Source: Romania rapid survey, June 2022 Source: Romania rapid surveys 2020-2022. Box 3. The impacts of the prolonged pandemic on human capital accumulation The COVID-19 pandemic and its consequential restrictive measures had severe effects on human capital accumulation, especially for children in vulnerable households. During the height of the pandemic, schools in Bulgaria and Poland were either fully closed or partially open for at least 40 weeks, twice as many as in Romania, and triple the affected weeks in Croatia. While governments implemented various programs supporting online learning, school disruption exacerbated learning inequalities. Households’ socio-economic inequalities translated into differential access to remote learning tools and parenting support or help at home. Children of parents who could not work remotely, who could not access the internet adequately, who could not benefit from educative support were more likely to face increased learning difficulties and drop out of school (Patrinos et al. 2022). The first wave of the pandemic marked a peak in students’ level of struggle with schoolwork. In Romania, 62 percent of parents of primary students reported so, compared to 52 percent of parents of middle-schoolers and 51 percent of parents of high schoolers. Two years after the pandemic outbreak, the scars were still lasting for children in poorer households. As of June 2022, 33 percent of parents at the bottom 40 percent of the income distribution reported difficulty in their children’s learning. This number is only 5 percent among parents at the top 20 percent of the income distribution. School struggles, June 2022 Top 20 -5 37 51 7 Income Middle 40 1 12 48 29 10 Bottom 40 12 21 40 22 5 - 20 40 60 80 100 Very difficult Difficult Same Easy Very easy Source: Romania rapid survey in June 2022. Lack of socialization and increased parental stress and economic difficulties at home took a heavy toll on children’s physical and mental health with potential long-lasting impacts. Two years after the pandemic outbreak, 35 percent of Bulgarian parents still reported both physical and mental impacts on their children. Parents of students in upper secondary school reported even higher concerns (38 percent), as the children had to sacrifice much of their teenagers’ crucial socializing and personal growth years. On average, 15 parents of parents reported their child to be receiving 14 psychological support, and this rate is higher (17 percent) among lower secondary students, showing the long-lasting psychological distress of students their ability to develop cognitive skills and to learn at school. Parents’ report of impact on child's health in Bulgaria, April 2022 60% 5% 5% 6% 4% 40% 11% 12% 12% 10% 20% 35% 35% 38% 33% 0% National Elementary Lower Secondary Upper Secondary Both Physical Mental Source: Bulgaria rapid survey in April 2022. Our results from the rapid survey echo recent findings from the literature on the impacts of the pandemic on long- term losses. School disruption is likely to lead to learning opportunities loss and in the loss of acquired learning, both likely to increase school drop-out (Azevedo, et al. 2021). Moreover, the impacts on children’s human capital are not only immediate, but also accumulate and harm their future learning and earning outcomes (Psacharopoulous et al 2021). In their review analysis of recent empirical publications on student learning loss, Patrinos et al. (2022) found that school closures related to Covid-19 led to learning losses amounting to an average of 0.17 standard deviation, equivalent to roughly a one-half year’s worth of learning. Yet, these losses widely vary across countries’ level of income. Jakubowski et al. (2022) estimated at -0.30 standard deviation the average learning loss in Poland. Psacharopoulous et al 2021 simulate the Covid-19 cost of school closures in earnings and estimate the lifetime present value of loss earning per student between $6,845 for middle income countries to $21,372 for high income countries. Rising prices of essential goods alter households’ consumption patterns toward buying less and buying cheaper products. At least 70 percent of European consumers reported trying to reduce their bills by changing their purchasing behavior. As of June 2022, 86 percent of Romanian households bought fewer goods in general, and another 85 percent of households would sacrifice other purchases to cover rising costs of essential goods (Figure 20). For Croatian households, these figures are 79 percent and 78 percent, respectively. With inflation front of people’s minds, European consumers also changed the way they shopped: about 75 percent of Romanian and Croatian consumers seek money-saving tactics such as buying cheaper brands or products on sale. Shifts in consumer’s purchasing patterns could signal changes in production and retailers’ marketing strategy in the upcoming shopping season, e.g. Christmas and New Year. Figure 20: Changes in consumption patterns in response to rising prices 15 Buy fewer products 53% 33% Sacrifice other purchases to cover rising prices of essentials 56% 29% Romania Buy cheaper brands 45% 29% Buy brands on sale/promotion 42% 36% Buy fewer products 16% 63% Sacrifice other purchases to cover rising prices of essentials 19% 59% Croatia Buy cheaper brands 16% 58% Buy brands on sale/promotion 17% 52% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Strongly agree Agree Source: Croatia rapid surveys in April 2022, Romania rapid survey in June 2022. Furthermore, challenges in households’ real purchasing power leads to an uptick of defaults on obligation in 2022. In parallel with rising costs of living, the proportion of households reporting arrears in paying utility bills and phone bills rose in recent months, about twice the rate for the bottom 40 percent as the general population, revealing the heterogeneity in households’ struggles across the income distribution (Figure 21 and 22). In addition, the share of households in arrears is likely to rise further if the temporary government support schemes currently in place do not extend to the coming year. Figure 21: Croatian households reporting arrears in Figure 22: Croatian households reporting arrears in utility bills, over time phone bills, over time 23 23 25 21 25 22 20 17 15 20 17 15 13 15 14 10 10 13 8 12 11 12 10 11 5 5 8 8 8 6 - Dec 2020 Mar 2021 Jun 2021 Sep 2021 Apr 2022 0 Dec 2020 Mar 2021 Jun 2021 Sep 2021 Apr 2022 Average Income bottom 40 Average Bottom 40 income Source: Croatia rapid surveys 2020-2022 Source: Croatia rapid surveys 2020-2022 While the war and costs of living are at the forefront of households’ daily concerns, the recovery still depends on the course of the pandemic, especially given the low vaccination rate in the countries in focus. Two years after the pandemic outbreak, a palpable fatigue of the prevention and restriction measures can be felt across countries and people were ready to move on with life. As of Spring 2022, most people welcomed the removal of restriction policies and reopening measures. In Romania and Croatia, over 70 16 percent of respondents supported the removal of pandemic-related restrictions such as mask wearing, social distancing, and self-isolation (Figure 23). The level of support was higher among urban residents and working people. This high level of support may stem from the belief that COVID-19 posed little or no threat to them. In fact, 56 percent of Romanians reported this to be their belief (Figure 24). Youth, urban residents, and people in higher income brackets were more likely to share this belief. Many people already felt lives were back to normal as they were doing most of the things that they used to do pre-crisis: 89 percent of Croatians and 80 percent of Romanians shared this sentiment. A majority of people felt the pandemic was already behind them and they were ready to move on with life (Figure 25). Figure 23: Supporting of governments’ Figure 24: Belief that COVID-19 poses low or no threat removal of restriction policies 100 87 80 90 80 78 82 73 73 71 74 76 70 80 % respondents 70 63 60 % respondents 60 50 50 40 40 75 30 62 62 65 20 30 56 58 51 58 52 47 46 50 10 20 - 10 national Rural Urban Not Working working - 65+ Middle 40 Top 20 national 18-30 50-64 Women Men Urban Rural Bottom 40 31-49 National Location Employment status Romania Croatia National Income Location Gender Age Source: Croatia rapid survey April 2022, Source: Romania rapid survey June 2022 Romania rapid survey June 2022. Figure 25: Perception about the phase of the Figure 26: Vaccine uptake pandemic 100 89 90 81 80 80 Percentage of total population 70 73 80 67 % respondents 70 60 60 56 60 50 40 42 50 40 30 30 20 30 10 20 - 10 2021-01 2021-02 2021-03 2021-04 2021-05 2021-06 2021-07 2021-08 2021-09 2021-10 2021-11 2021-12 2022-01 2022-02 2022-03 2022-04 2022-05 2022-06 2022-07 2022-08 0 I feel the pandemic I am doing most of is behind me and the things I used to Bulgaria Primary course Croatia Primary course am moving on with do pre-COVID life Poland Primary course Romania Primary course EU Primary course Croatia Romania Source: Croatia rapid survey April 2022, Source: ECDC Vaccine tracker (2022), Romania rapid survey June 2022. https://vaccinetracker.ecdc.europa.eu/public/extensions/c ovid-19/vaccine-tracker.html#national-ref-tab The vaccination uptake in all four countries is below the EU average, hampering the collective fight against the pandemic and hence the economic recovery process. By the end of August 2022, 73 percent of Europeans took the COVID-19 vaccines, but only 30 percent of Bulgarians did – the lowest vaccination rate in the EU (Figure 26). Romania had a slightly better coverage with 42 percent of its total population, yet this uptake rate 17 remained low to curb the transmission of Covid-19. The coverage rates in Croatia and Poland were at 56 percent and 60 percent, respectively. The uptake rates of booster doses were even more lagging behind with only 9 percent having completed the boosters in Romania, 11 percent in Bulgaria, 23 percent in Croatia and 32 percent in Poland, compared to 53 percent for the EU average. Though low, these figures mask substantial subnational disparities in the rate of vaccine uptake with some regions in Bulgaria with vaccination rates as low as 19.6 percent of the population and even lower booster uptake at 6.9 percent of the population (see Box 4). Box 4: Regional disparities in vaccine uptake Romania and Bulgaria both lag, by a long margin, vaccination rates in other EU Member states despite similar access to vaccines, recording the lowest vaccination rates in the EU-27. As of early May 2022, Romania had fully vaccinated 42 percent of its population while Bulgaria had vaccinated only 30 percent of its population. Booster uptake rates show similarly alarmingly low figures. Beyond these national figures, there is substantial variation at a subnational level. As of early February, in Romania, alarmingly, several parts of the country have virtually no vaccine uptake – ranging from 5 communes with fewer than 5 percent of their adult residents fully vaccinated to another with rates close to 64 percent. Unfortunately, nearly one in every four communes has adult vaccination rates below 20 percent. Bulgaria shows similar discrepancies across regions with the region with Sofia, the capital city region having full vaccination rates as high as 42.5 percent and booster uptake of 14.7 percent, though while low by European standards, far outpaces that of Montana, the region with the lowest uptake registering a full vaccination rate of only 19.6 percent and a booster uptake of 6.9 percent. Vaccine (and booster) uptake does not appear to be randomly distributed – regions with low vaccine and booster uptake tend to be “laggingâ€? regions, characterized by low-income levels. Similarly, there is a link between at-risk-of poverty rates and vaccine uptake across regions: regions with higher shares of the population living below the EU poverty thresholds tend to have lower vaccine uptake. Given their low vaccination rates, lagging regions are at risk of being left further behind and descending further into poverty in the event of future waves of the pandemic. Full vaccination rates and GDP per capita by NUTS-3 region in Bulgaria, May 2022 Source: Author’s computations Though access and other logistical constraints likely contribute to low rates of vaccine uptake, it is unlikely to be the main problem. According to a survey conducted by the WHO in September 2021, the 40% of Romanian adults who reported a low willingness to get vaccinated perceived the same level of access to vaccination centers as those with a high willingness to get vaccinated. Instead, the low uptake rates are likely to be primarily driven by high concentrations of vaccine hesitancy in these geographic areas. According to data from the recent rapid response surveys conducted by the World Bank, 94 percent of respondents in Bulgaria and 73 percent of respondents in Romania who had not been vaccinated reported that they either did not intend to get vaccinated or were unsure about getting vaccinated. Complementary analysis suggests that this vaccine hesitancy is fueled by a combination of health concerns, misinformation, and distrust in authorities and pharmaceutical companies. Despite national campaigns on the safety and efficacy of vaccines, and the introduction of vaccine mandates, these pockets of resistance to vaccines have proven difficult to permeate suggesting that a more nuanced and targeted 18 approach might be needed to reach the vaccine hesitant. Preliminary data from evidenced-based behavioral interventions aimed at addressing core concerns and constraints surrounding vaccines and crafting targeted messaging to address these have been piloted in North Macedonia and Serbia. These interventions have shown promising results in addressing low vaccination rates and could readily be replicated in Bulgaria and Romania. As the war in Ukraine continues, Europeans’ concern about the impacts of the war become almost universal. With two out of four countries covered in this note sharing borders with Ukraine, the war has direct impacts on neighboring countries in terms of the influx of Forcibly Displaced Persons (FDPs) . By the end of August 2022, over a quarter of Ukraine’s population is estimated to have fled their homes, making this the fastest growing refugee crisis since World War II. Poland is the largest recipient of FDPs with about 1.3 million staying in the country, following by Bulgaria (0.9 million) and Romania (0.8 million). The war in Ukraine has shaken the geopolitical stability in the region, further disrupted supply chains and energy security, and impeded trade and financial flows. The influx of FDPs has also put additional pressures on the host populations, both economically and socially, if the crisis prolongs. Europeans’ concern about the war in Ukraine is nearly universal, with the top anxieties reported concerning the conflict and further price hikes. In Bulgaria, Croatia, and Romania where we conducted surveys after the Russian invasion, nearly 100 percent of respondents were worried about the war. About 85 percent of Croatians were concerned about security and political stability in the EU. Meanwhile, 82 and 58 percent of Romanians and Bulgarians, respectively, were concerned about conflicts near the border. Worries about further food and energy price hikes stemmed from the disruption of supply chain and energy provision were constantly in the mind of at least 75 percent of the population in the three countries above (Figure 27). Expectedly, people at the bottom 40 percent of the income distribution were more susceptible to higher inflation (Figure 29). For FDP-hosting countries such as Romania and Bulgaria, some host population expressed early worries about having strangers in the community, pressures on public services, and job competition, suggesting that government’s prompt and stronger interventions, including campaigns, might be needed to ensure smooth integration of FDPs. One in every three Bulgarians were anxious about having strangers in the community. Another 29 percent expressed concerns that the influx of FDPs can put pressure on public services such as hospital and schools where the provision of services was already low for host community (Figure 28). The level of anxiety about public service delivery were higher in urban areas consistent with the concentration of FDPs in these areas (Figure 30). This suggests that more campaigns and interventions might be needed to improve the welfare of FDPs while avoiding tension between them and host population. As it is still unclear about how the war will evolve and how long Ukrainian FDPs will stay in host communities, the level of concern about job competition was relatively low (Figure 28). Nevertheless, younger people were more likely to be worried about this aspect (Figure 31). Figure 27: Concern about conflicts and Figure 28: Concern about FDPs and domestic issues in host rising prices stemmed from the war in countries Ukraine 19 100 35 33 32 82 84 83 86 29 74 30 % respondents 80 % respondents 58 25 20 60 20 14 14 40 15 10 8 7 20 5 0 0 Conflict - on Rising prices Worried for Pressure on public Strangers in the Competition for borders or inside (energy or food) refugees services from community jobs refugees (schools, the country hospitals, etc.) Romania Bulgaria Croatia Romania Bulgaria Source: Bulgaria and Croatia rapid surveys Source: Bulgaria rapid survey in April 2022, Romania rapid in April 2022, Romania rapid survey in June survey in June 2022. 2022. Figure 29: Concern about rising Figure 30: Concern about pressure Figure 31: Concern about job prices, by income on public services, by location competition, by age group 86 84 32 90 79 35 20 17 80 30 15 68 26 14 % respondents 70 64 23 15 13 % respondents 60 25 % respondents 60 11 10 18 9 20 10 50 40 15 5 3 30 10 20 5 0 10 0 Age 18- Age 31- Age 50- Age 65+ 0 Urban Rural 30 49 64 Bottom 40 Mid 40 Top 20 Pressure on public services Job competition Rising prices Bulgaria Romania Bulgaria Romania Bulgaria Romania Source: Bulgaria rapid survey in April 2022, Romania rapid survey in June 2022. 4. The need for coordinated measures transitioning from government support to inclusive growth policies Well-designed and coordinated policy support will be needed to protect the most vulnerable from a broad range of socio-economic impacts of the prolonged pandemic and the war in Ukraine. In Bulgaria, Croatia, Poland, and Romania, the governments already put in place programs to support workers from the contraction in employment and to shield consumers from enduring the full impact of the energy and food price rises. In addition, authorities also stepped in to accommodate the influx of the FDPs and ease pressures on the host population. As the pandemic and the war continues, uncertainty remains in the horizon. Governments will need to continue to support vulnerable population while pivoting towards more sustainable growth with a focus on resilience and cohesion. With substantial learning losses from disruptions to schooling caused by the COVID-19 pandemic, governments need to focus on reversing the long-term impact on the human capital accumulation and accelerating learning. These actions could be conducted through a RAPID framework, recently developed by the World Bank in collaboration with development partners.6 The framework highlights five components to 6 https://www.worldbank.org/en/topic/education/publication/the-rapid-framework-and-a-guide-for-learning-recovery- and-acceleration 20 establish a learning recovering program (i) reaching every child and keeping them in school, (ii) assessing learning levels regularly, (iii) prioritizing teaching the fundamentals, (iv) increasing the efficiency of instruction including through catch-up learning, and (v) developing psychosocial health and wellbeing. Targeted cash transfers can work better in providing much needed support to the most vulnerable than the general price caps or reduction in VAT. The generosity and coverage of the Guaranteed Minimum Income schemes could be temporarily increased to provide sufficient support to individuals excluded or inadequately covered by other support packages. As governments are constrained by limited fiscal space, having targeted programs with temporary increase in benefits could improve the efficiency and equity in the use of public resources. While Bulgaria, Croatia, Poland, and Romania have already used a mix of interventions including price controls, VAT reduction, and targeted transfers, the majority of these programs are not targeted at the most vulnerable, and are therefore more costly than needed to prevent households from falling into poverty. Moreover, the GMI programs could be complemented by improving the provision of social services through addressing poor households’ constraints and enhancing case management systems to provide better information on social and employment services to beneficiaries.7 In addition, consolidation of fragmented social assistance programs could improve the adaptability and resilience of the social protection to support households especially in the case of shocks. Active labor market policies for worker reskilling and skill upgrading will be critical to ensure that no workers are left behind. As the World Bank Rapid Surveys data showed, vulnerable workers were disproportionately affected by employment contractions induced by the crises. Thus, active market policies must play a crucial role in preparing workers to face future challenges in the labor market, in particular the imminent trends of the green and digital transition in Europe 2030 strategy. Complementary measures to ensure that the green transition is just, are even more important. The decarbonization process will inevitably lead to job losses in certain sectors. Thus, active labor market policies can facilitate affected workers’ transitions to other sectors. Moreover, more public spending and efficiency improvements of labor market policies promoting digital skills will be equally important to ensure the digital transition can benefit the entire workforce, including low-wage, low-skilled workers and to better match workers and firms in the ever-changing labor market. In addition, governments in the four countries covered in this note have significant resources from the Recovery and Resilience Facility 8 to expand digital services and infrastructure to lagging areas to speed up the spatial convergence of digital access. Other interventions can include improving the efficiency of public employment services, developing skill forecast instruments to better invest in future skills, and scaling up social benefits and unemployment benefits to temporarily support affected workers. Finally, to better design support policies that achieve its targeted objectives, it is important to generate evidence on the effectiveness of policies and interventions through regular monitoring of implementation progress and impact evaluation. 7 More information on case management can be found here https://case-compass.org/ 8 EU Member States are required to allocate at least 20 percent of the funds to measures supporting the digital transition and addressing digital challenges. 21 References Azavedo, J., Hassan, A., Goldemberg, D., Geven, K. and Iqbal S. 2021. Simulating the Potential Impacts of Covid- 19 School Closures on Schooling and Learning Outcomes: A set of Global Estimates. The World Bank Research Observer. Bejaković, P. and KlemenÄ?ić, I. 2022. Croatia: Working life in the COVID-19 pandemic 2021, Eurofound. Boboc, C., Valentina V., Ghiță, S. and Deliu, A. Romania: Working life in the COVID-19 pandemic 2021, Eurofound. Gospodinova, Z. and Miteva, N. 2022. Bulgaria: Working life in the COVID-19 pandemic 2021, Eurofound. Jakubowski, M., Gajderowicz, T., Wrona, S. 2022. Achievement of Secondary School Students After Pandemic Lockdown and Structural Reforms of Education System Results from TICKS 2021 Assessment in Warsaw. Evidence Institute Policy Note 1, Warsaw. Patrinos, H., Vegas, E. and Carter-Rau, R. 2022. An Analysis of Covid-19 Student Learning Loss. World Bank Policy Research Working Paper. Psacharopoulos, G., V. Collis, H.A. Patrinos and E. Vegas. 2021. The COVID-19 Cost of School Closures in Earnings and Income across the World. Comparative Education Review Surdykowska, B. 2022. Poland: Working life in the COVID-19 pandemic 2021, Eurofound. World Bank. 2020. EU Regular Economic Report 6: Restarting Resilience: The impacts of the COVID-19 pandemic on inclusion in Europe, World Bank. 2021. EU Regular Economic Report 7: Inclusive Growth at A Cross Road. World Bank. 2022. EU Regular Economic Report 8: Inclusive Growth—Tested Again: Part 1 of Living Up to Potential in the Wake of Adverse Shocks 22 Annex 1: Data Between June 2020 and June 2022, we conducted series of rapid surveys in Bulgaria, Croatia, Poland, and Romania to capture the impacts of the crisis on households’ welfare. These surveys cover core topics on employment, income, household financial wellbeing (e.g. assets, saving, arrears), mental health, children’s education, COVID-19 vaccination, and perception of government’s response policies as the crisis unfold. Results from all surveys were not systematically comparable as they covered different survey times and country-specific questions. We have made effort to harmonize the datasets and socio-demographic categories in order to include as many countries as possible for each topic of study. However, it is impossible to harmonize every topic. The absence of a country or a survey period in a graph reflects the unavailability or incomparability of indicators. Bulgaria Croatia Poland Romania Survey type 15-20 minute phone 15-20 minute phone 15-20 minute phone 15-20 minute phone survey survey survey survey Survey rounds 7 6 4 9 Timing 1. Jun 2020 1. Jun 2020 1. May 2020 1. May 2020 2. Oct 2020 2. Dec 2020 2. June 2020 2. Jul/Aug 2020 3. Dec 2020/Jan 3. Mar 2021 3. May 2021 3. Oct/Nov 2020 2021 4. Jun 2021 4. Nov 2021 4. Nov/Dec 2020 4. Feb/Mar 2021 5. Sep 2021 5. Feb/Mar 2021 5. Jun 2021 6. Apr 2022 6. May/Jun 2021 6. Sep 2021 7. Nov/Dec 2021 7. Apr 2022 8. Mar/Apr 2022 9. Jun 2022 Sample size 1,500 households 1,500 households 1,500 households 1,500 households (panel) (cross-section) (cross-section) (panel) for survey rounds 1, 3, 5, 7, and 9. 2,200 households (panel) for survey rounds 2, 4, 6, and 8. Geographic • National • National • National • National coverage • Rural • Rural • Rural • Rural • Urban • Urban • Urban • Urban Questionnaire • Demographic • Demographic • Demographic • Demographic topics • Employment • Employment • Employment • Employment • Income • Income • Income • Income • Financial • Financial • Financial • Financial wellbeing wellbeing wellbeing wellbeing • Mental health • Mental health • Mental health • Mental health • Social benefits • Social benefits • Social benefits • Social benefits • Children’s • Children’s • Children’s • Children’s education education education education • Vaccine uptake • Vaccine uptake • Vaccine uptake • Vaccine uptake • Perception of • Perception of • Perception of • Perception of government’s government’s government’s government’s responses responses responses responses • Ukraine crisis • Prices and • Prices and consumption consumption pattern pattern • Ukraine crisis 23 • Ukraine crisis Similar surveys • The survey design is also linked to the World Bank global rapid assessment monitoring framework 24